Join our investing community

House prices to Jump 40% in 5 years

Discussion in 'Real Estate' started by Billv, 29th Mar, 2008.

  1. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    That's assuming anyone can get finance to buy the property at those prices :rolleyes:
     
  3. Liverpool St

    Liverpool St Well-Known Member

    Joined:
    21st May, 2007
    Posts:
    96
    Location:
    Sydney
    Property

    Yeah, I agree. Perhaps they can just extend the loan period. 100 year mortgages, pass the mortgages onto the beneficiaries

    LS
     
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    If interest rates were 5-6% lending would be much easier.
    I can't understand why the EU and the US can have low interest rates and we can't. cheers
     
  5. samaka

    samaka Well-Known Member

    Joined:
    30th Sep, 2007
    Posts:
    308
    Location:
    Sydney
    ... because the RBA (rightly or wrongly) believes that inflation is getting out of hand.
     
  6. D&K

    D&K Well-Known Member

    Joined:
    14th Nov, 2005
    Posts:
    206
    Location:
    Canberra
    Makes a great headline, but that's all. 40% in 5 years is the result of compounding growth at only 7%pa. The average over the last 10 years resulted in a compounding rate of equal to just under 10%pa. The headline could have equally read 'long term house price growth to drop 30%' (i.e. 3%/10%); 100% accurate with a completely different emotion. It must have been a slow news day.
    Dave
     
  7. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    They've got to sell newspapers somehow...

    Have you ever seen the quality journalism on Today Tonight and A Current Affair?
     
  8. Norak Bastiat

    Norak Bastiat Well-Known Member

    Joined:
    16th Sep, 2007
    Posts:
    66
    Location:
    Melbourne
    Since interest rates are above 7 per cent then capital gains won't even cover the interest you pay. 40% in 5 years is too low.

    But property is heterogenous. E.g. the 25% increase in median house price in Melbourne recently disguised the fact that rich inner-city houses went up about 50% while the poor outer-suburb houses achieved 3-9%

    When you average it out you get 25% but that doesn't mean any house will get that.

    If you can select the right house, you'll be fine. Of course, if you have the ability to always pick the right house or company, then you should be a fund manager making billions in performance fees.
     
  9. voigtstr

    voigtstr Well-Known Member

    Joined:
    24th Jan, 2007
    Posts:
    679
    Location:
    Hobart
    We'll see how tight lending is over the next month or so. We are organising a valuation on our unit, so we can get a LOC equal to the equity. The we will try to get a loan for unit valued between 250-280k in Hobart (probably closer to 280K) and rent that out. We know there is rental demand here. It will be very interesting to see how that demand effects the rental amount people will pay.
     
  10. TryHard

    TryHard Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    863
    Yeah, but IP rental returns will be the 4% yield p.a or thereabouts, plus any CG, so you'd still be doing ok, depending on your ability to service the rental shortfall while getting some growth ?
     
  11. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    and rents will be increasing by at least 5% pa
    Cheers
     
  12. Redwing

    Redwing Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    476
    Location:
    PERTH..WA
    In Perth I believe that there are now about 16,000 properties on the market as opposed to the usual 12,000 in a 'normal market' (whatever that is) and 19,119 homes were listed for sale in four week period early this year (10,643 over the same period last year).

    Real Estate agents are talking about "correct pricing" for Home sales; Land & H&L packages are offering all kinds of incentives for purchases as most everyone sits on the sidelines watching what happens

    Interest rate rises, houses being passed in at auction,Homes sales stalling, FHO waiting to see whats next

    In the meantime rents and population growth still rise

    Over the next 5 Years I'm sure some Huge Fortunes will be made :D
     
  13. Aimjoy

    Aimjoy Member

    Joined:
    13th Jul, 2007
    Posts:
    21
    Location:
    Central Coast NSW
    Yeah, I guess a headline like "House growth normal" or "Houses grow at same rate for last 140 years" isn't going to sell too many papers.

    Cheers,
    Aimjoy